Tuesday, September 8, 2009

It's All About the Ideas (and the Money)

Last week, I showed the steps to starting a spin-off company. Remember, ‘spin-off’ is the term used to describe a new company that is created based upon research from a university, hospital, or research center. (Think of the CSI and CSI: Miami analogy.) I will refer to all of the steps together, from start to finish, as the business development pipeline or Pipeline. Here is the Pipeline again as a refresher:
Someone once told me, you always have to start from the beginning. So, that's where we'll start. The beginning of the the Pipeline is to identify new opportunities from research. But as you know if you're a researcher, this research has to be funded somehow, usually by governments, universities and/or non-profit organizations.

I need to squeeze in my academic quote for this blog. Bear with me for three truly academic--but important--sentences (from my forthcoming thesis):
Studies have shown that research funding directly affects the Pipeline by increasing the number of spin-offs created at the end. Adams & Griliches (1996) and Siegel et al (1999) found a positive relationship between research funding and the number of university spin-offs created. DeGregorio & Shane (2005) found a direct, empirical relationship between research funding and the number of spin-offs created.
(Whew . . . that wasn't too bad, was it?)

In other words, as research funding increases, so does the number of spin-offs that can be created. This is good news for research funding advocates—not only does research funding lead to better health, it also leads to new businesses. Creating those new businesses can be referred to as ‘economic development’—two buzz words that any elected official loves to hear.
The next step in the Pipeline is to secure intellectually property (IP) rights, usually in the form of patents or licenses. Many research institutions have specialists who will help researchers secure IP rights. These IP specialists usually work in Technology Transfer Offices within the research institutions. IP is a relatively complex topic, and an entire series could be devoted to IP alone. At this point, all you need to know if that IP rights are important to start a spin-off, so visit your institution’s Technology Transfer Office soon if you have questions.

After securing IP rights, it’s time to secure funding to start the new business. Surprise, surprise--you need more money to make your idea work. The next post in this series will focus solely on possible sources of financing through the different stages of business development.

With the right people, policies and resources in place, an entrepreneur will be able to develop his or her technology into a successful market product. There are a lot of resources that state and local governments can provide to help entrepreneurs. Future posts in this series will discuss those resources as well.

This is Part 2 of 8 in our Entrepreneurship series.
Part 1 - Science and Entrepreneurship: An Introduction
Part 2 - It's All About the Ideas (and Money)
Part 3 - Financing a New Business in the Life Sciences
Part 4 - Leading Life Science States
Part 5 - Life Sciences in North Carolina
Part 6 - Life Sciences in Minnesota
Part 7 - Life Sciences in Kansas
Part 8 - Life Science Industry Overall

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